Ita/756/2007 Of The Commissioner Of Income Tax v. Motor Industries Co Ltd

IN THE HIGH COURT OF KARNATAKA AT BANGALORE. DATED THIS THE 14 DAY OF FEBRUARY 2014. PRESENT THE HON‘'BLE MR. JUSTICE DILIP B BHOSALE AND| THE HON‘'BLE MR. JUSTICE B MANOHAR ITA.NO.756/ 2007 BETWEEN 1.THE COMMISSONER OF INCOME TAXCENTRAL CIRCLE, C R BUILDING)CENTRAL CIRCLE, C R BUILDING) QUEENS ROAD, BANGALORE 2.THE JOINT COMMISSIONER OF INCOME TAXSPECIAL RANGE-3, C.R. BUILDINGSPECIAL RANGE-3, C.R. BUILDING QUEENS ROAD, BANGALORE .., APPELLANTS (BY SRI K V ARAVIND, ADV.,). AND M/S. MOTOR INDUSTRIES CO LTDHOSUR ROAD, ADUGODIBANGALORE-30 .., RESPONDENT (BY SRI MISS TANMAYEE RAJKUMAR, ADV., FOR M/S KING &|PARTRIDGE) THIS ITA FILED U/S 260-A OF I.T.ACT, 1961 ARISING OUT OF|ORDER DATED 04/05/2007 PASSED IN ITA.NO.2746/BANG/2004, FORTHE ASSESSMENT YEAR 1998-99, PRAYING TO I. FORMULATE THE.SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II. ALLOW THE.APPEAL AND SET ASIDE THE ORDERS PASSED BY THE ITITATBANGALORE.INTTANO.2746/BANG/2004DATED04/05/2007CONFIRMING THE ORDER PASSED BY THE APPELLATE COMMISSIONER. AND CONFIRM THE ORDER PASSED BY THE JOINT COMMISSIONER OF.INCOME TAX, SPECIAL RANGE-3, BANGALORE, IN THE INTEREST OF.JUSTICE AND EQUITY.| THIS ITA COMING ON FOR HEARING, THIS ~ DAY, Dilip B. Bnosale J.DELIVERED THE FOLLOWING: PC: This income tax appeal is directed against the order dated 04.05.2007 rendered by Income Tax Appellate.Tribunal, Bangalore Bench “B” (for short “the Tribunal”) in|ITA No.2746/2004 for the assessment year 1998-99—whereby the Tribunal had partly allowed the appeal filed by|the revenue. The appeal before the Tribunal was directedagainst the order passed by the Commissioner of Income.Tax (Appeals)-III, Bangalore (for short “the AppellateAuthority or AA”) dated 05.07.2004 in ITA No.190/DCIT,|C-12(1)CIT(A)III/O1-02, whereby the AA had partly.allowed the appeal filed by the assessee against the order|passed by the Assessing Officer dated 30.03.2001. 2).This appeal was admitted to consider thesubstantial questions of law as formulated in paragraph Nos.4, 5 and 6 of the memorandum of appeal. The substantial questions of law read thus: .!Whether the Appellate Authorities were correctin nolding that the assessee is entitled to claim.deduction in respect of contribution made tobenevolent funds despite tne assessee notdemonstrating the compulsion to undergo this.expense as per the provisions of the Act?in nolding that the assessee is entitled to claim.deduction in respect of contribution made tobenevolent funds despite tne assessee notdemonstrating the compulsion to undergo this.expense as per the provisions of the Act? ..!Whether the Appellate Authorities were correctin holding that the receipts from the sale ofscrap is required to be excluded from theCUrNOVETLfortneDUrDPOSeof.computingGcdeduction under Section 8O0HHC and 8QHHEotne Act?in holding that the receipts from the sale ofscrap is required to be excluded from theCUrNOVETLfortneDUrDPOSeof.computingGcdeduction under Section 8O0HHC and 8QHHEotne Act? ...!Whether the Appellate Authorities were correctin nolding that 90% development fee shouldnot be deducted from the profits of Dusiness.for the purpose of computing deduction underSection 8O0HHC and SOHHE of the Act?”in nolding that 90% development fee shouldnot be deducted from the profits of Dusiness.for the purpose of computing deduction underSection 8O0HHC and SOHHE of the Act?” 3.Learned counsel for the respondent-assessee, at the outset, invited our attention to the order passed by|this Court dated 02.11.7200/7 in ITA No.3 of 2002. Tnequestion of law that was framed therein reads thus: 1).Whether the appellate authorities are correct|in holding that the contribution made py the.assessee/employer towards the Benevolent fundcreated in favour of the employee is entitled todeduction under Section 40A(9) of the Act despitethere being no compulsion under any other law as. contemplated under the section for making such acontripution? 3.Learned counsel for the respondent-assessee, at the outset, invited our attention to the order passed by|this Court dated 02.11.7200/7 in ITA No.3 of 2002. Tnequestion of law that was framed therein reads thus: 1).Whether the appellate authorities are correct|in holding that the contribution made py the.assessee/employer towards the Benevolent fundcreated in favour of the employee is entitled todeduction under Section 40A(9) of the Act despitethere being no compulsion under any other law as. contemplated under the section for making such acontripution? 4The Division Bench, for the reasons recorded inparagrapn-/7 of the order dated 20.11.2007 answered thesaid question in favour of the assessee and against therevenue. In view thereof, learned counsel for therespondent prayed for answering the first substantial|question of law framed in the present appeal in favour ofthe assessee and against the revenue. 5.Learned counsel for the appellants-revenue did.not dispute the submission advanced by learned counsel|for the respondent. Hence, we answer the first question in|favour of the assessee and against the appellant in terms.of the judgment dated 02.11.2007 passed in ITANo.3/2002. 6.Insofar as the second question is concerned,learned counsel for the appellants-revenue submitted thatit is squarely covered by the judgment of this Court dated 10.12.2009 in ITA No.27/2005 whereby the said question has been answered in favour of the revenue and againstthe assessee. Having confronted with this, learned counsel |appearing for the assessee did not dispute the submission.made by learned counsel for the appellants-revenue. J.We,naveperusedthe.judgmentdated10.12.2009 in ITA No.27/2005 and in paragraph-8 thereof.the question that was framed by the Division Bench, which.is similar to the second question in the present appeal,|reads tnus: “3) Whether the Tribunal was correct in holding)that excise duty, sales tax and scrap sales are not|includible in the total turnover for the purpose of)deduction under section 8OHHC and SOHHE of the.Act. 2” For the reasons recorded in paragraph-8, theDivision Bench answered the said question in favour ofrevenue and against the assessee. 8.Learned counsel for the respondent-assessee did not dispute the legal position as reflected in paragraph- 8OT|tnejuagmentcated10.12.2009.In.tne circumstances, we answer the second question in favour ofthe revenue and against the assessee in terms of the.juagment dated 10.12.2009 in ITA No.27/2005. | Q. This Court Is informed tnat even the. third!question raised in the present appeal can also be answered in favour of the assessee in terms of the judgment dated|04.08.2010 in ITA No.28/2005. The question framed in.ITA No.28/2005, which is similar to the third question in)the present appeal, reads thus: ~Whetner the income received by the Assessee|towards developmental work in the course of its|export business which is different from the income.arising out of the business of export out of India of|any goods or mercnanadise, is liable be reduced by90% as provided under clause(1) of (baa) of SectionSOHHC of the Act?” 10.Tne Division Bench answered the said question in favour of the assessee for the reasons recorded in the!juagment dated 04.08.2010. In view thereof, learned,counsel for the respondent-assessee prayed for decidingthe said question in favour of the assessee. 11.Mr.K.V.Aravind, learned counsel appearing forthe revenue did not dispute the submission advanced by.learned counsel for the respondent-assessee. Hence, weanswer the third question in favour of the assessee and.against the revenue in terms of the judgment dated04.08.2010 in ITA 28/2005. The appeal ts accordingly disposed of' No costs. | TL Sd/-.JUDGE. Sd/-JUDGE|